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Mortgage featured stories

What is Lenders Mortgage Insurance (or LMI)?

Home Finance, Mortgage Broking, Property, Tips
Share
Lenders Mortgage Insurance, commonly referred to as ‘LMI’, is an insurance that covers a Lender should a borrower default on their loan and the lender incurs a loss. As a general rule LMI is payable on Home Loans where the loan to valuation ratio (LVR) is greater than 80% and allows borrowers purchasing property to potentially gain a loan at up to 95% of the purchase price of a home.
While borrowers do not get a direct benefit from LMI it does enable them to purchase a home with a smaller deposit, therefore potentially enabling purchasers to get into their own home sooner. How much does LMI Cost? Unfortunately there is not a set premium on the cost of LMI. The premium is calculated on the amount of the loan and the LVR. Generally the higher the loan insured and the higher the LVR, the greater the LMI premium will be. As an example; – On a $400,000 loan with an LVR of 95%, the LMI Premium would be approx $14,500#. – By comparison, on a $400,000 loan with an LVR of 90%, the premium would reduce to approximately $8,000# The important point being the greater the equity and lower the LVR, the lower the LMI premium will be. Does LMI need to paid in cash? No, most lenders enable the LMI premium to be capitalised (added on) to the loan. This obviously increases the amount of your loan and therefore means that you are also paying interest on this amount. However by capitalising the premium it does mean that borrowers can get into a home sooner rather than saving the additional funds. How often is LMI paid? Unlike a traditional insurance product, LMI is a once only premium that is payable at settlement of your loan. Do all Lenders charge LMI? Traditional Bank, Credit Union and Building Society lenders will all charge LMI as a general rule when the LVR is over 80%. Occasionally some may only require LMI at LVR’s above 85% as a special offer, but these offers are infrequent. There are some non-traditional lenders that require a payment of a Lenders Protection Fee rather than LMI, however such lenders are also likely to offer different loan terms and often higher interest rates. How do I find out more about my situation? To assess your own individual situation or find out more about LMI you should contact your local Finance Broker or Lender. If you are considering purchasing a property in the short to medium term I would highly recommend that you meet with a local Finance Broker first to understand all costs and fees associated with buying a property. # Please note premiums detailed above are approximate only and can vary from Lender to Lender. For a more accurate quote on your specific loan please contact your Finance Broker or Lender

More Stories

Is a tree or sea change on your horizon?

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Is a tree or sea change on your horizon? Fresh air, no bumper-to-bumper traffic and more affordable home prices. There’s plenty of appeal in regional living, including a chance to potentially reduce your home loan.

Is a tree or sea change on your horizon?

News
Is a tree or sea change on your horizon? Fresh air, no bumper-to-bumper traffic and more affordable home prices. There’s plenty of appeal in regional living, including a chance to potentially reduce your home loan.

Is a tree or sea change on your horizon?

News
Is a tree or sea change on your horizon? Fresh air, no bumper-to-bumper traffic and more affordable home prices. There’s plenty of appeal in regional living, including a chance to potentially reduce your home loan.

Why three-in-four Aussies turn to a broker for home loan help

News
Why three-in-four Aussies turn to a broker for home loan help You might have seen a headline or two about a particular big bank being at war with brokers. Nothing could be further from the truth. Our mission is – and always will be – putting you first. That’s why three in every four borrowers now come to us for help.

Why three-in-four Aussies turn to a broker for home loan help

News
Why three-in-four Aussies turn to a broker for home loan help You might have seen a headline or two about a particular big bank being at war with brokers. Nothing could be further from the truth. Our mission is – and always will be – putting you first. That’s why three in every four borrowers now come to us for help.

Why three-in-four Aussies turn to a broker for home loan help

News
Why three-in-four Aussies turn to a broker for home loan help You might have seen a headline or two about a particular big bank being at war with brokers. Nothing could be further from the truth. Our mission is – and always will be – putting you first. That’s why three in every four borrowers now come to us for help.

Mortgage featured stories

What is Lenders Mortgage Insurance (or LMI)?

Home Finance, Mortgage Broking, Property, Tips
Share
Lenders Mortgage Insurance, commonly referred to as ‘LMI’, is an insurance that covers a Lender should a borrower default on their loan and the lender incurs a loss. As a general rule LMI is payable on Home Loans where the loan to valuation ratio (LVR) is greater than 80% and allows borrowers purchasing property to potentially gain a loan at up to 95% of the purchase price of a home. While borrowers do not get a direct benefit from LMI it does enable them to purchase a home with a smaller deposit, therefore potentially enabling purchasers to get into their own home sooner. How much does LMI Cost? Unfortunately there is not a set premium on the cost of LMI. The premium is calculated on the amount of the loan and the LVR. Generally the higher the loan insured and the higher the LVR, the greater the LMI premium will be. As an example; – On a $400,000 loan with an LVR of 95%, the LMI Premium would be approx $14,500#. – By comparison, on a $400,000 loan with an LVR of 90%, the premium would reduce to approximately $8,000# The important point being the greater the equity and lower the LVR, the lower the LMI premium will be. Does LMI need to paid in cash? No, most lenders enable the LMI premium to be capitalised (added on) to the loan. This obviously increases the amount of your loan and therefore means that you are also paying interest on this amount. However by capitalising the premium it does mean that borrowers can get into a home sooner rather than saving the additional funds. How often is LMI paid? Unlike a traditional insurance product, LMI is a once only premium that is payable at settlement of your loan. Do all Lenders charge LMI? Traditional Bank, Credit Union and Building Society lenders will all charge LMI as a general rule when the LVR is over 80%. Occasionally some may only require LMI at LVR’s above 85% as a special offer, but these offers are infrequent. There are some non-traditional lenders that require a payment of a Lenders Protection Fee rather than LMI, however such lenders are also likely to offer different loan terms and often higher interest rates. How do I find out more about my situation? To assess your own individual situation or find out more about LMI you should contact your local Finance Broker or Lender. If you are considering purchasing a property in the short to medium term I would highly recommend that you meet with a local Finance Broker first to understand all costs and fees associated with buying a property. # Please note premiums detailed above are approximate only and can vary from Lender to Lender. For a more accurate quote on your specific loan please contact your Finance Broker or Lender

More Stories

Is a tree or sea change on your horizon?

News
Is a tree or sea change on your horizon? Fresh air, no bumper-to-bumper traffic and more affordable home prices. There’s plenty of appeal in regional living, including a chance to potentially reduce your home loan.

Is a tree or sea change on your horizon?

News
Is a tree or sea change on your horizon? Fresh air, no bumper-to-bumper traffic and more affordable home prices. There’s plenty of appeal in regional living, including a chance to potentially reduce your home loan.

Is a tree or sea change on your horizon?

News
Is a tree or sea change on your horizon? Fresh air, no bumper-to-bumper traffic and more affordable home prices. There’s plenty of appeal in regional living, including a chance to potentially reduce your home loan.

Why three-in-four Aussies turn to a broker for home loan help

News
Why three-in-four Aussies turn to a broker for home loan help You might have seen a headline or two about a particular big bank being at war with brokers. Nothing could be further from the truth. Our mission is – and always will be – putting you first. That’s why three in every four borrowers now come to us for help.

Why three-in-four Aussies turn to a broker for home loan help

News
Why three-in-four Aussies turn to a broker for home loan help You might have seen a headline or two about a particular big bank being at war with brokers. Nothing could be further from the truth. Our mission is – and always will be – putting you first. That’s why three in every four borrowers now come to us for help.

Why three-in-four Aussies turn to a broker for home loan help

News
Why three-in-four Aussies turn to a broker for home loan help You might have seen a headline or two about a particular big bank being at war with brokers. Nothing could be further from the truth. Our mission is – and always will be – putting you first. That’s why three in every four borrowers now come to us for help.

Mortgage featured stories

What is Lenders Mortgage Insurance (or LMI)?

Home Finance, Mortgage Broking, Property, Tips
Share
Lenders Mortgage Insurance, commonly referred to as ‘LMI’, is an insurance that covers a Lender should a borrower default on their loan and the lender incurs a loss. As a general rule LMI is payable on Home Loans where the loan to valuation ratio (LVR) is greater than 80% and allows borrowers purchasing property to potentially gain a loan at up to 95% of the purchase price of a home. While borrowers do not get a direct benefit from LMI it does enable them to purchase a home with a smaller deposit, therefore potentially enabling purchasers to get into their own home sooner. How much does LMI Cost? Unfortunately there is not a set premium on the cost of LMI. The premium is calculated on the amount of the loan and the LVR. Generally the higher the loan insured and the higher the LVR, the greater the LMI premium will be. As an example; – On a $400,000 loan with an LVR of 95%, the LMI Premium would be approx $14,500#. – By comparison, on a $400,000 loan with an LVR of 90%, the premium would reduce to approximately $8,000# The important point being the greater the equity and lower the LVR, the lower the LMI premium will be. Does LMI need to paid in cash? No, most lenders enable the LMI premium to be capitalised (added on) to the loan. This obviously increases the amount of your loan and therefore means that you are also paying interest on this amount. However by capitalising the premium it does mean that borrowers can get into a home sooner rather than saving the additional funds. How often is LMI paid? Unlike a traditional insurance product, LMI is a once only premium that is payable at settlement of your loan. Do all Lenders charge LMI? Traditional Bank, Credit Union and Building Society lenders will all charge LMI as a general rule when the LVR is over 80%. Occasionally some may only require LMI at LVR’s above 85% as a special offer, but these offers are infrequent. There are some non-traditional lenders that require a payment of a Lenders Protection Fee rather than LMI, however such lenders are also likely to offer different loan terms and often higher interest rates. How do I find out more about my situation? To assess your own individual situation or find out more about LMI you should contact your local Finance Broker or Lender. If you are considering purchasing a property in the short to medium term I would highly recommend that you meet with a local Finance Broker first to understand all costs and fees associated with buying a property. # Please note premiums detailed above are approximate only and can vary from Lender to Lender. For a more accurate quote on your specific loan please contact your Finance Broker or Lender

More Stories

Is a tree or sea change on your horizon?

News
Is a tree or sea change on your horizon? Fresh air, no bumper-to-bumper traffic and more affordable home prices. There’s plenty of appeal in regional living, including a chance to potentially reduce your home loan.

Is a tree or sea change on your horizon?

News
Is a tree or sea change on your horizon? Fresh air, no bumper-to-bumper traffic and more affordable home prices. There’s plenty of appeal in regional living, including a chance to potentially reduce your home loan.

Is a tree or sea change on your horizon?

News
Is a tree or sea change on your horizon? Fresh air, no bumper-to-bumper traffic and more affordable home prices. There’s plenty of appeal in regional living, including a chance to potentially reduce your home loan.

Why three-in-four Aussies turn to a broker for home loan help

News
Why three-in-four Aussies turn to a broker for home loan help You might have seen a headline or two about a particular big bank being at war with brokers. Nothing could be further from the truth. Our mission is – and always will be – putting you first. That’s why three in every four borrowers now come to us for help.

Why three-in-four Aussies turn to a broker for home loan help

News
Why three-in-four Aussies turn to a broker for home loan help You might have seen a headline or two about a particular big bank being at war with brokers. Nothing could be further from the truth. Our mission is – and always will be – putting you first. That’s why three in every four borrowers now come to us for help.

Why three-in-four Aussies turn to a broker for home loan help

News
Why three-in-four Aussies turn to a broker for home loan help You might have seen a headline or two about a particular big bank being at war with brokers. Nothing could be further from the truth. Our mission is – and always will be – putting you first. That’s why three in every four borrowers now come to us for help.

First home buyers turn to Bank of Nan and Pop

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First home buyers turn to Bank of Nan and Pop Nan and Pop have always been good for birthday money, but one-in-10 grandparents are taking their generosity to the next level: helping their grandkids buy a first home.

First home buyers turn to Bank of Nan and Pop

News
First home buyers turn to Bank of Nan and Pop Nan and Pop have always been good for birthday money, but one-in-10 grandparents are taking their generosity to the next level: helping their grandkids buy a first home.

First home buyers turn to Bank of Nan and Pop

News
First home buyers turn to Bank of Nan and Pop Nan and Pop have always been good for birthday money, but one-in-10 grandparents are taking their generosity to the next level: helping their grandkids buy a first home.

What you should know before buying ‘subject to finance’

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What you should know before buying ‘subject to finance’ Not sure if you’ll get the thumbs up for a home loan? But you really, really like that house that just popped up? Making an offer ‘subject to finance’ could be the right move. Here’s how it works.

What you should know before buying ‘subject to finance’

News
What you should know before buying ‘subject to finance’ Not sure if you’ll get the thumbs up for a home loan? But you really, really like that house that just popped up? Making an offer ‘subject to finance’ could be the right move. Here’s how it works.

What you should know before buying ‘subject to finance’

News
What you should know before buying ‘subject to finance’ Not sure if you’ll get the thumbs up for a home loan? But you really, really like that house that just popped up? Making an offer ‘subject to finance’ could be the right move. Here’s how it works.

Not feeling the budget love? 4 ways you could still get ahead

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Not feeling the budget love? 4 ways you could still get ahead If the latest federal government budget is leaving you hungry for perks and savings, you’re not alone. We’ve had a brainstorm and here are four ways you could start working towards your property goals now.

Not feeling the budget love? 4 ways you could still get ahead

News
Not feeling the budget love? 4 ways you could still get ahead If the latest federal government budget is leaving you hungry for perks and savings, you’re not alone. We’ve had a brainstorm and here are four ways you could start working towards your property goals now.

Not feeling the budget love? 4 ways you could still get ahead

News
Not feeling the budget love? 4 ways you could still get ahead If the latest federal government budget is leaving you hungry for perks and savings, you’re not alone. We’ve had a brainstorm and here are four ways you could start working towards your property goals now.

Low deposit scheme helps over 150,000 families buy sooner

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Low deposit scheme helps over 150,000 families buy sooner Whether you’re rat running your local streets, or have a knack for always picking the fast-moving supermarket queue – everyone loves a good time-saving hack. Well, today we’ll let you in on a scheme that could get you into your first home years – yep years – sooner!

Low deposit scheme helps over 150,000 families buy sooner

News
Low deposit scheme helps over 150,000 families buy sooner Whether you’re rat running your local streets, or have a knack for always picking the fast-moving supermarket queue – everyone loves a good time-saving hack. Well, today we’ll let you in on a scheme that could get you into your first home years – yep years – sooner!

Low deposit scheme helps over 150,000 families buy sooner

News
Low deposit scheme helps over 150,000 families buy sooner Whether you’re rat running your local streets, or have a knack for always picking the fast-moving supermarket queue – everyone loves a good time-saving hack. Well, today we’ll let you in on a scheme that could get you into your first home years – yep years – sooner!

Here’s why your borrowing power might soon get a lift

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Here’s why your borrowing power might soon get a lift Who doesn’t love a tax cut? Most of us are now only weeks away from saving on our tax bills, with Stage 3 tax cuts to kick in from 1 July. But another key advantage is that the tax cuts could give your borrowing power a nice boost.

Here’s why your borrowing power might soon get a lift

News
Here’s why your borrowing power might soon get a lift Who doesn’t love a tax cut? Most of us are now only weeks away from saving on our tax bills, with Stage 3 tax cuts to kick in from 1 July. But another key advantage is that the tax cuts could give your borrowing power a nice boost.

Here’s why your borrowing power might soon get a lift

News
Here’s why your borrowing power might soon get a lift Who doesn’t love a tax cut? Most of us are now only weeks away from saving on our tax bills, with Stage 3 tax cuts to kick in from 1 July. But another key advantage is that the tax cuts could give your borrowing power a nice boost.

What you should know before buying ‘subject to finance’

News
What you should know before buying ‘subject to finance’ Not sure if you’ll get the thumbs up for a home loan? But you really, really like that house that just popped up? Making an offer ‘subject to finance’ could be the right move. Here’s how it works.

What you should know before buying ‘subject to finance’

News
What you should know before buying ‘subject to finance’ Not sure if you’ll get the thumbs up for a home loan? But you really, really like that house that just popped up? Making an offer ‘subject to finance’ could be the right move. Here’s how it works.

What you should know before buying ‘subject to finance’

News
What you should know before buying ‘subject to finance’ Not sure if you’ll get the thumbs up for a home loan? But you really, really like that house that just popped up? Making an offer ‘subject to finance’ could be the right move. Here’s how it works.

Not feeling the budget love? 4 ways you could still get ahead

News
Not feeling the budget love? 4 ways you could still get ahead If the latest federal government budget is leaving you hungry for perks and savings, you’re not alone. We’ve had a brainstorm and here are four ways you could start working towards your property goals now.

Not feeling the budget love? 4 ways you could still get ahead

News
Not feeling the budget love? 4 ways you could still get ahead If the latest federal government budget is leaving you hungry for perks and savings, you’re not alone. We’ve had a brainstorm and here are four ways you could start working towards your property goals now.

Not feeling the budget love? 4 ways you could still get ahead

News
Not feeling the budget love? 4 ways you could still get ahead If the latest federal government budget is leaving you hungry for perks and savings, you’re not alone. We’ve had a brainstorm and here are four ways you could start working towards your property goals now.

Low deposit scheme helps over 150,000 families buy sooner

News
Low deposit scheme helps over 150,000 families buy sooner Whether you’re rat running your local streets, or have a knack for always picking the fast-moving supermarket queue – everyone loves a good time-saving hack. Well, today we’ll let you in on a scheme that could get you into your first home years – yep years – sooner!

Low deposit scheme helps over 150,000 families buy sooner

News
Low deposit scheme helps over 150,000 families buy sooner Whether you’re rat running your local streets, or have a knack for always picking the fast-moving supermarket queue – everyone loves a good time-saving hack. Well, today we’ll let you in on a scheme that could get you into your first home years – yep years – sooner!

Low deposit scheme helps over 150,000 families buy sooner

News
Low deposit scheme helps over 150,000 families buy sooner Whether you’re rat running your local streets, or have a knack for always picking the fast-moving supermarket queue – everyone loves a good time-saving hack. Well, today we’ll let you in on a scheme that could get you into your first home years – yep years – sooner!

Here’s why your borrowing power might soon get a lift

News
Here’s why your borrowing power might soon get a lift Who doesn’t love a tax cut? Most of us are now only weeks away from saving on our tax bills, with Stage 3 tax cuts to kick in from 1 July. But another key advantage is that the tax cuts could give your borrowing power a nice boost.

Here’s why your borrowing power might soon get a lift

News
Here’s why your borrowing power might soon get a lift Who doesn’t love a tax cut? Most of us are now only weeks away from saving on our tax bills, with Stage 3 tax cuts to kick in from 1 July. But another key advantage is that the tax cuts could give your borrowing power a nice boost.

Here’s why your borrowing power might soon get a lift

News
Here’s why your borrowing power might soon get a lift Who doesn’t love a tax cut? Most of us are now only weeks away from saving on our tax bills, with Stage 3 tax cuts to kick in from 1 July. But another key advantage is that the tax cuts could give your borrowing power a nice boost.

How to know if you’re paying a fair price

News
How to know if you’re paying a fair price We all love the idea of nabbing a bargain property, but for most home buyers the real issue is whether they’re overvaluing a place – and paying too much in the process.

How to know if you’re paying a fair price

News
How to know if you’re paying a fair price We all love the idea of nabbing a bargain property, but for most home buyers the real issue is whether they’re overvaluing a place – and paying too much in the process.

How to know if you’re paying a fair price

News
How to know if you’re paying a fair price We all love the idea of nabbing a bargain property, but for most home buyers the real issue is whether they’re overvaluing a place – and paying too much in the process.

Can you remember your home loan interest rate?

News
Can you remember your home loan interest rate? Where you put your car keys, who won the footy premiership three years back, the new prime minister of New Zealand’s name – all very much socially acceptable things to forget. Your home loan rate shouldn’t be on that list.

Can you remember your home loan interest rate?

News
Can you remember your home loan interest rate? Where you put your car keys, who won the footy premiership three years back, the new prime minister of New Zealand’s name – all very much socially acceptable things to forget. Your home loan rate shouldn’t be on that list.

Can you remember your home loan interest rate?

News
Can you remember your home loan interest rate? Where you put your car keys, who won the footy premiership three years back, the new prime minister of New Zealand’s name – all very much socially acceptable things to forget. Your home loan rate shouldn’t be on that list.